Another change is the rise of “venture philanthropy.” In the late 1990s, technology entrepreneurs established philanthropic foundations with a different approach to funding, featuring: (1) greater emphasis on outcomes and performance, (2) a closer relationship between the foundation and the grantees, and (3) a strategy of funding a portfolio of “social investments” in the way that venture capital firms fund start-up companies. Alexander added that this rise had also changed philanthropy through the use of multiple initiatives to improve outcome evaluation, efforts to measure grantee satisfaction with the funding process, and a greater focus on innovation in programs and service delivery.
At the same time, however, he said, nonprofit organizations are facing the same pressures as all institutions because of the “great recession.” As a result, nonprofit organizations may face structural changes, with the growing use of program-related investments and dedicated venture philanthropic funds. Alexander added that as a result of these recent changes, the funds both provided by and going to nonprofit organizations are more concentrated in a smaller number of organizations, and are awarded using a somewhat different set of objectives. Also, the shift to outcomes-oriented investments may complicate the formulation of questions that attempt to assess the R&D component of grants. Lastly, he said, he expects that non-profit R&D performers are likely to diversify into new areas of activity.
Alexander said that there are three nonsurvey data sources of R&D funding to and from nonprofit institutions: (1) various federal data repositories, including USASpending.gov, the Federal Audit Clearinghouse, and the Internal Revenue Service Master Business File; (2) third-party data providers, including organizational profile repositories (in particular Guidestar and the NCCS); and (3) nonprofit self-reporting, that is, annual reports and financial statements and IRS Form 990 (for details, see SRI International, 2008). To assess the data in each of these repositories, Alexander used the quality criteria for nonsurvey data sources from Statistics Canada’s Quality Guidelines (Statistics Canada, 2009). For federal repositories, the major concern is that, except for the IRS, the coverage is poor, since the other sources focus on nonprofit organizations that receive federal grants. For third-party data repositories, the major concern is that detailed information is lacking. For nonprofit self-reporting, the major concerns are coverage and the level of detail, especially since the field for “Nonprofit Program Classification” is not required and is rarely used.
Alexander said that in his opinion, given the various recent dynamics in the sector he noted earlier, there is a strong likelihood that the current National Patterns’ estimates for nonprofit R&D funding, both funders and performers, are not accurate. Evidence in support of this conclusion is that the most recent (2008) National Patterns’ estimate of total nonprofit R&D funding was $12.6 billion, but the report on private foundation grant-